Laing O'Rourke (BMC) Pty Limited v Transport Infrastructure Development... [2007] NSWCA 211 | Case summary

MONDAY 13 AUGUST 2007 LAING O'ROURKE (BMC) PTY LIMITED (FORMERLY KNOWN AS BARCLAY MOWLEM CONSTRUCTION LIMITED) v TRANSPORT INFRASTRUCTURE DEVELOPMENT CORPORATION & 2 ORS Ex Tempore Judgment 1 CAMPBELL JA: The Claimant had entered a contract dated 24 June 2005 with the Second Opponent, CRI, under which the Claimant agreed to construct certain works connected with a transport interchange at Chatswood. That contract I will refer to as the "D and C Contract". CRI had entered a contract also dated 24 June 2005 with the First Opponent, who I will refer to as TIDC, under which CRI promised to construct those works. That contract will be referred to as the "Development Deed". For the purpose of today's application TIDC, CRI and the Claimant can be regarded as being respectively the principal, the head contractor and a subcontractor of that building project. 2 There is an agreement known as the Independent Certifier Deed dated 29 July 2005 between TIDC, CRI, the Claimant, Page Kirkland Management Pty Limited and certain other parties under which Page Kirkland is given the power to certify various matters including entitlement to extensions of time for the purpose of that building project. On various dates between 1 June 2006 and 14 September 2006 Page Kirkland issued correspondence that purported to decide some extension of time claims known as claims numbered 25 and 27 relating to the building project. Page Kirkland purported to give the extensions of time. 3 There are provisions for the extracurial determination of disputes contained in both the D and C Contract and the Development Deed. These provisions are, apart from one significant matter, in substantially the same terms. They all envisage that if a dispute is notified, particular officers of the parties in dispute will meet and try to resolve the dispute, failing which it will be submitted to expert determination, and that that expert determination will be final and binding unless one of the parties appeals. If there is an appeal, that appeal will be resolved in the first place by discussion between executives of the parties in dispute, failing which it will be decided by arbitration. 4 The one significant matter of difference is that the dispute resolution procedures in the D and C Contract contain a clause 27.17. Under it, in very broad terms, if a particular dispute is relevant to the operation of both the Development Deed and the D and C Contract, it is to be determined by the dispute resolution procedure under the Development Deed, though with the Claimant having the opportunity to be present at, but not to participate in, any hearing or meeting in the course of the dispute resolution and to provide draft submissions to CRI. Each party bears its own costs of participation in that process. 5 There is also a dispute resolution procedure in clause 13 of the Independent Certifier Deed. It is much simpler than clause 27 of the other two contracts, providing in very broad terms for the parties to negotiate, failing which they endeavour to agree upon a procedure to resolve the dispute or difference, failing which they are free to litigate. 6 On 22 November 2006 TIDC served a notice of dispute under clause 27.1 of the Development Deed asserting that the extensions of time purportedly granted by Page Kirkland concerning claims 25 and 27 were not validly granted. On 31 May 2007 TIDC sought the appointment of an expert to resolve that dispute. On 1 June 2007 TIDC gave what purported to be a notice under clause 13.2 of the Independent Certifier Deed alleging that the independent certifier had, in broad terms, breached its obligations under the Independent Certifier Deed in granting the extensions of time and that it had also breached a duty of care in so doing. 7 On 8 June 2007 the Claimant began proceedings in the Technology and Construction List of the Equity Division seeking in broad terms a declaration that the dispute that had been notified on 22 November 2006 was one that could be resolved only under clause 13 of the Independent Certifier Deed and other relief relating to clause 27 of the Development Deed and the D and C Contract. A significant part of the contention of the Claimant was that each of the clauses 27 was void for uncertainty and that clause 27.17 of the D and C Contract was void as a matter of public policy. 8 An interlocutory injunction was granted to restrain any steps being taken supposedly under clause 27 of the Development Deed and the D and C Contract until that litigation was determined. 9 Hammerschlag J delivered a judgment in those proceedings on 17 July 2007, Laing O'Rourke v Transport Infrastructure [2007] NSWSC 723. His Honour dismissed the plaintiff's summons and dissolved the interlocutory injunction. 10 The Claimant notified the other parties to the litigation on 20 July 2007 that it would appeal against the decision of Hammerschlag J. It requested the parties to suspend the appointment of an expert to determine the extension dispute pending the outcome of the appeal. They did not agree with that request. Since then a notice of appeal has been filed, on 2 August 2007. 11 CRI and TIDC have now taken some steps purportedly to carry out the clause 27 dispute resolution process. A barrister, Mr Steven Goldstein, has been appointed as an expert. He accepted appointment as that expert on 24 July 2007. He set a timetable for the making of submissions. Under that timetable TIDC is to serve its submissions today or tomorrow. A timetable for other submissions has also been set with the last of the submissions in reply to be served on 1 November 2007. Mr Goldstein is to provide his expert determination by 29 November 2007. 12 If the extensions of time that are in dispute had not been granted, the contractual date for completion of the work would have been 31 December 2007. If they have been validly granted, the revised date for completion of the works is 8 June 2008. I mention these dates because they bear upon the time that might be involved in either an appeal, or in the following through of a clause 27 procedure. 13 The motion that is now before the court is in substance an application for an injunction to restrain the proceedings before Mr Goldstein or any other purported invocation of clause 27 for the purpose of deciding the validity of the extensions of time that are in question, and for that restraint to continue until after the determination of the appeal. There is also an application for expedition of the appeal. 14 Each application for an injunction must be determined on its own merits. The same principles govern an application for interlocutory injunctions in appellate proceedings as apply in first instance proceedings, though sometimes the fact that the proceedings are appellate proceedings will itself bear upon the application of those principles. 15 I was reminded that circumstances in which an interlocutory injunction pending the determination of an appeal can be granted have been summarised by Kirby P in Jesasu Pty Limited v Minister for Mineral Resources (1987) 11 NSWLR 110 at 117. Kirby P there said: "[W]here, as here, there is an appeal as of right to this Court which the appellant has exercised, where no more relief is sought than to preserve the status quo pending the outcome of the appeal, where the appeal appears to raise an arguable point, where no special prejudice is alleged, where the Court could deal with the questions promptly and where the failure to give relief may involve serious (and arguably irreversible) damage to the appellant and loss of valuable rights, the balance of convenience favours the issue of an injunction upon appropriate conditions." 16 I do not read that statement as anything more than a consideration of how, on the facts of the particular application then before the court, the balance of convenience lay. 17 In the present case, it seems to me that the questions raised in the appeal are arguable. Having reached that view it is not appropriate for me to consider in any depth how the strength of the arguments appears at the moment. 18 In that situation, whether an interlocutory injunction should be granted depends upon the balance of convenience. How the strength of the case that is made out appears at the time of application for an interlocutory injunction can sometimes properly be part of the considerations that are taken into account on the balance of convenience. However, that question is not in the present case one that I need enter into in any depth. I need only say that at present it does not seem to me that the case is so powerful that it is highly likely to succeed, nor so weak that it is almost inevitable that it will fail. 19 Mr Inatey of Senior Counsel for the Claimant does not submit that if the injunction is refused and the clause 27 dispute resolution procedure continues to operate and reaches finality before judgment is delivered on the appeal, the appeal will be rendered futile. Rather, he submits that allowing the clause 27 procedure to continue will be wasteful. He reminds me of Kirby P's reference, in Jesasu, to it sometimes being appropriate to grant relief where failure to give relief may involve serious and arguably irreversible damage to the appellant and loss of valuable rights. 20 The extensions of time were granted because the building work was found to involve the relocation of a particular Telstra cable, apparently of great significance to Telstra's operations, that ran across the site. Deciding about whether there was an entitlement to an extension of time, and, if so, how long an extension, seems likely, on the evidence before me, to involve investigation of what was known by the various contracting parties about the existence of the cable at the time the various contracts were entered into, and how the existence of the cable and the need to relocate it in fact affected the progress of the work. 21 While the solicitor for the Claimant is not at present in a position to express any final view about it, her present view is that preparing draft submissions relevant to the dispute would involve reviewing at least twenty-five volumes of material, interviewing and taking statements from at least four persons, and also possibly engaging an expert to assess the actual delay caused by the need to relocate the cable. She does not say that it is not possible to carry out those tasks in the time allowed by Mr Goldstein's timetable, and does not give an estimate of the likely cost, even as a minimum. 22 Mr Inatey also points out that even if the expert's determination proceeds to its end, that does not necessarily mean that the clause 27 procedure is over because one or other of the parties might wish to appeal from that expert determination. 23 Mr Rich and Mr Carruthers, for TIDC and CRI respectively, submit that even if the appeal were to show that the clause 27 procedure was not open, that would not necessarily mean that all work involved in the clause 27 procedure would be wasted. There would still be an investigation of and preparation for questions that would ultimately need to be litigated. They submit that it is a matter for the Claimant to decide to what extent it involves itself in the clause 27 procedure and thereby incurs costs. They submit that while there is nothing that can be particularly pointed to concerning this project, in any complex building project it is desirable for the parties to know where they stand, sooner rather than later. 24 When an interlocutory injunction is granted, the persuasive onus is on the party seeking the injunction to persuade the court that the balance of convenience favours the grant of an injunction. In the present case, I am not persuaded that the balance of convenience has been shown to favour the grant of an injunction. The evidence is hazy about both the costs that would be involved in the Claimant involving itself in the clause 27 procedure, and about the extent to which any costs incurred would actually be wasted if the Claimant were ultimately to succeed in the appeal. Thus the application for an injunction is refused. 25 That leaves the application for expedition. This is not a case where there is the high degree of practical urgency that calls for a reallocation of cases within the Court's list. However, it is a case of a kind that is appropriate to be granted a measure of expedition, though not at the highest level. It is the sort of case that has arguments that are in a comparatively small compass, and that could probably be got ready for hearing fairly quickly. I propose to direct that it be given a measure of expedition, though not expedition of the highest degree. In saying that, I expect the parties to cooperate in the preparation of the necessary documents for the appeal. If there is a failure in this respect, the question of whether the expedition should be continued can be reconsidered. 26 As there was no practical opposition to the grant of expedition, and the substantive time was all involved in the application for an injunction, the appropriate order in my view is that the Claimant pay the costs of the First and Second Opponents of the motion. I so order. **********

Laing O'Rourke (BMC) Pty Limited v Transport Infrastructure Development Corporation

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